Production in the Indian Manufacturing Sector: A Panel Data Analysis

Priyanka Dembla
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Priyanka Dembla: Miranda House, University of Delhi

Indian Economic Review, 2000, vol. 35, issue 1, 41-65

Abstract: In the literature two approaches have been followed in the estimation of production relations - estimation of the conventional production function and estimation of the so-called augmented production function. This paper estimates both kinds of production relations using the more flexible translog functional form for the registered manufacturing sector as a whole as well as for each use-based sector - i.e. consumer goods, intermediate goods, capital goods and basic goods using panel data for the period 1973-74 to 1995-96 and attempts to reconcile and compare the two approaches. A distinguishing feature of this study is that it attempts to test for the presence of unit root in panel data of the relevant variables. The estimated results reveal the importance of the additional explanatory variables used in the augmented model besides labour and capital stock in explaining production behaviour in the sector. Another important observation relates to the suitability of the translog specification. This implies that all the variables used in the study exhibit significant nonlinearities and that there is significant interaction among them.

JEL-codes: C23 E23 (search for similar items in EconPapers)
Date: 2000
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